Saturday, May 12, 2012

Detroit - Turn Back The Clock 100 Years


This blog is written in Michigan, so posts about Detroit are fairly frequent.  Over the past half-dozen years, one concept has been put forth repeatedly: make Detroit's geographic area consistent with it's population.

This conceptual map has been shown many times.  It is based on the common-sense approach that for Detroit to be viable, it must be supportable by the features that make most cities viable and be sized appropriately.

This argument was once again proffered in light of Gov. Snyder's latest attempts to bring fiscal sanity to the city.


As Michigan Recovers Detroit Spirals Into Oblivion
While this may seem far-fetched to many, the reverse would seem perfectly reasonable.  Here is a map that shows Detroit's geographic growth:

All of that light blue area represents post-1915 growth from a boom-town land grab.  The reality is that the boom has gone bust and the annexed land is a giant anchor on any possible re-floating of the city from its present miserable depths. [image source]  Funny how that pre-1916 area is similar to the "New Detroit" concept, isn't it?
So, why is no one else talking about the elephant in the room?  Is it because Detroit is now a "black city" and one cannot deal honestly with "black cities?"  Quite probably.  One cannot raise the specter that a nearly all-black city has failed.  Wouldn't be politically correct.  Wouldn't be the first either.
But to be fair, here is an opposing view:
DETROIT (WWJ/1270 Talk Radio) – A community activist wants to see Detroiters who are on welfare become homeowners. 
How? It’s a bold move, but Maureen Taylor with the Michigan Welfare Rights Organization said her group is hijacking empty bank-owned homes for those who are quickly running out of hope and resources. 
“You can’t imagine,” Taylor said, “when we get to work at 9 and 10 in the morning, there are 20 to 30 people in the hallway talking about ‘I don’t have any more money, my rent is due’ — three or four months behind — what can I do? And, it’s unreal, because we don’t have answers except to say, ‘here’s a list of houses that we have intercepted that have been repossessed by banks, pick one and move in.’” 
But what happens when banks catch on? As many are discovering with the backlog in foreclosed homes, it’s taking longer and longer for banks to actually repossess one. 
“They have to take us to court, and by the way, the banks are picking up … it’ll take five or six to seven months before they figure out that we’re in there, and by that time, we will have taken hundreds of houses, if not thousands, so they can catch us if they’re fast enough.” 
WWJ 950 legal analyst and Talk Radio 1270 host Charlie Langton said if and when the bank that owns the property finds out someone’s inside, it’s still not a criminal matter. “It’s a civil issue, it’s not a criminal act,” he said, adding banks could potentially find out the identity of the squatter and try to charge them for back rent and any damages to the property. 
“But what are the chances they would do that?” Langton asked, adding that it’s not illegal to give out the addresses of abandoned homes. 
It would be a bonus for the neighborhood, he added, if squatters would take care of the lawn and maintain the property. 
“It is incumbent on the landowner to take pride in their property,” he said. “But in cases like this, the homeowner doesn’t care, they just let it go. They don’t care. That twisted logic is the real problem.”
Yup, that's a plan to fix Detroit.

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There is always an easy solution to every human problem—neat, plausible, and wrong.
Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
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Tracking Interest Rates

Tracking Interest Rates


SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

December 11, 2007 Somehow the Fed misses the obvious.
[Image from:]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)